Ep385: Rael Bricker – Sell before You Buy the Inventory

Andrew Stotz 00:02
Hello fellow risk takers and welcome to my worst investment ever stories of loss to give you winning in our community we know that to win in investing, you must take risk but to win big, you've got to reduce it. If you're not already a member of our community, please go to my worst investment ever.com right now join and receive the following five free benefits, the risk reduction checklist, my weekly investment research email to help you increase your returns a 25% discount on all a starts Academy courses instant access to our Facebook community to get to know guests and fellow listeners. And finally, my curated list of the Top 10 podcast episodes. Fellow risk takers This is your worst podcast hosts Andrew Stotz from a Stotz Academy, and I'm here with Pete featured guests. Rail Bricker rail. Are you ready to rock?

Rael Bricker 00:58
I'm ready to rock. Let's go.

Andrew Stotz 01:01
So I'm going to introduce you to the audience. And already just looking at you're ready. I'm normally standing up but today I'm sitting down, but I can see you got a lot of energy. Yeah,

Rael Bricker 01:11
that's the only way to convey my energy. People.

Andrew Stotz 01:14
Love it. Love it. All right. So ladies and gentlemen, from being 6000 feet underground in a mind to starting an education business that grew to have more than 5000 4000 students to spending years working in venture capital, Rael. Bricker has seen it all. He has listed companies on multiple international stock exchanges, and his financial services group has settled more than $3 billion in loans. Over 19 years. He has a diverse work history, combined with unique global research interviews with companies in more than 25 countries. Taking this knowledge and experience makes him perfect to advise people on growing and achieving excellence. As he experienced, he has experienced a roller coaster himself, and knows how to navigate twists, turns and loops. You can reach him at WWW dot excellent podcast.com. rail, take a minute and filling for the tidbits about your life.

Rael Bricker 02:18
So I'm often asked about how I started on the minds which is, so I grew up in a fairly middle class family in South Africa, I moved to Australia 22 years ago, but I grew up and I was not in a position where my parents could afford to send me to university. So I had to get a scholarship, I was good at maths and science. And so I was naturally pushed along to engineering. There was a T shirt I had that said, I don't even know what an engineer does an hour or one. And, and so I needed a scholarship. And I was offered one by one of the big mining houses. So I kind of did engineering and then started working for them. And that's how I ended up being an engineer on a mineshaft of at 6000 foot underground. You know, it was a, it was an interesting time of my life.

Andrew Stotz 03:08
Maximum. I mean, I'm just feeling so terrifying when you visualize that much Earth above your head,

Rael Bricker 03:14
you tend not to you actually more concerned about the fact that it's 30 plus centigrade. So closer to 90, Fahrenheit, and the ground continuously have 90% humidity. So you will come under ground, your overall is wet. And it stays that way until you go back up. So yeah, it has its experiences. It has its terrifying moments, but it was overall in retrospect, I learned a lot about managing people. But I never appreciated that experience at the time.

Andrew Stotz 03:48
Hmm. Just a tough experience. Yeah, maybe you could just take a minute to tell us a little bit about, you know, listeners in the US listeners across Asia and Europe who are, you know, curious to know more about your business and what you do and all that maybe you can just give a little insight into that.

Rael Bricker 04:07
I yeah. So when I came to Australia, I was in venture capital in South Africa. I joined the fund here. Two years later, they asked me to move to Sydney after we'd listed the property, sorry, they listed the fund on the stock exchange in Australia. I decided not to do that. That was where I went out on my own. I went into a business and I'll talk more about that as my worst investment ever shortly. But after that, I realized a few things and I ended up starting a financial services group also out of coincidence more than anything else. And that business has now grown to about just over 3 billion in mortgages. They're over. It's almost 20 years now since I started it. And that's seven years ago. I had two cardiac stents in 2013 I was doing I was doing triathlons training for a marathon. And I just started feeling very tired. And I went to the cardiologist who said, by the way, you've got two blockages, you escaped a bullet because you didn't actually have a heart attack, but we're going to fix it. And so that made me realize that I really need to follow some passions. And one of those passions is being onstage. In my 3 billion in mortgages, a billion was sold from stage. And so I knew that I could be on stage talking. And then at the same time, the mortgage industry asked me to talk at a conference on how to build a mortgage business. We just talked to Berlin at the time. And so we Yeah, why not? So I went to the conference spoke to a packed audience. And I've got on a plane and sort of writing a book and said, that's what I want to pursue as a passion I want to pursue and behind me, you'll see a fine one of the wooden blocks, it says Business Excellence, I want to make businesses more excellent. And so I pursue a passion I, as a professional speaker, I still own my financial services group. But I'm known as the Business Excellence guy. And I work with business leaders to create Business Excellence, and rich and robust cultures to grow their bottom line. And I also measure and I put measures in to help them grow their bottom line. So that's what I do. That's my passion project. But I still love helping people become millionaires by helping them structure the finance correctly.

Andrew Stotz 06:22
Exciting. Well, ladies and gentlemen, just go to excellent podcast and learn more. So rail, why don't I move us into the next part of this interview? And that is to ask you this question. Now it's time to share your worst investment ever. And since no one ever, ever, ever goes into that worst investment thinking it will be. Tell us a bit about the circumstance leading up to and then tell us your story.

Rael Bricker 06:51
Okay, so I was in the venture fund. Here in Australia, we had listed on the stock exchange, it was about four months later. And for a whole variety of reasons. I wasn't comfortable. I had spent days, weeks months riding perspectives running around the country, raising the capital. And then I got handed a $3,000 bonus by the board and said, Oh, we would like you on the board. But we're giving you a $3,000 bonus and go back to your desk and do some more work. And I just felt I wasn't in my right place. I love the venture capital space. I love what we're doing. I just had to get out of that fund. And so an opportunity came up in April 2001. I flew to Germany, a friend of mine in South Africa, had introduced me to a product that was being produced in Germany called flippin grip. Now sounds weird, flippin group. So put 2001 into context. All data was there was no such thing as SSD drives, thumb drives weren't invented yet. People were storing data on DVDs or CDs or CDs and becoming two DVDs. And so there was the backup medium besides hard drives that everybody was using. flippen group was a fantastic looking set of CD covers the way you'd put 20 of them into a binder. And so you could have binders on your shelf with 20 CDs. And it was really cool tech, you press the little button on the side of the CD holder and the CD popped out. And they came out in all the apple colors, the blueberry color and the BlackBerry color. The Apple Macs came out at that term, and there's five different sort of shaded pastel colors and so are those really cool, I flew over to Germany, and so invested there was my first part of the investment, put money in, went to Germany bought, you know, $5,000 with the stock border back to Australia. I hadn't thought through the settle, okay. I went I bought $5,000 with the stock got shipped out to Australia. I went around and I found guys in Australia to help me with the packaging and distribution, because we needed Australian packaging etc. I then hadn't sold one yet but ordered $80,000 worth of stock by a container load bought, you know, got a friend to allow me to put in US eight pallets or 10 pallets whatever it was into his warehouse and had all that logistics stuff sorted out. In July I left the venture fund, you know, all this was happening in the background. And then I decided right now better go out and sell this stuff. Now, my entire life up into that point from starting my first business that you patient business in 1992. To reversing that into a stock market listing in 1996. And being in venture funds from that period onwards, was all about selling services and I didn't actually perceive this about myself. Someone asked me the other day, what's my biggest limiting belief. And I said, the limiting belief I have is that I have no limitations, that I can do anything. And then I'm bulletproof. And obviously, having two cardiac stents kind of told me I'm not that bulletproof. But so I bought the stock and arrived. And then I started going out selling. And I realized very, very quickly, or took me about six months, but in the space of a life, six months is pretty quick learning that, in order to be a single product line, none of the big retailers, so the, you know, the equivalent of a staples in the US would want to talk to you, because you could only supply them with one product line needed to have multiple product lines, you needed to have distribution in all the major cities, you needed lots of other logistics around it. And yet, I was absolutely obsessed with the product, and not anything else around it. And so I eventually, you know, kind of my interest dwindled, because I just was banging my head against a brick wall trying to sell the stuff. I had a few guys purchase some small, independent retailers. But then I don't even have point of sale stuff for them to show people how this worked. Like, you know, to show people the beauty of it. I mean, it was, it was the right place, right time, wrong marketing, you know, I just, I never got it right. I kind of faded off from that. In other words, by the same token, I had just come out of venture capital, a few of the companies I've been talking to had asked me to raise capital for them. And I went, I don't know how to do that. But I'll find out which is my approach to most things in life. And I found out that in Australia, I had to be licensed as a finance broker or mortgage broker. So I got my license as a mortgage broker, I didn't know anything about mortgages, but I went and got a license to sell mortgages. And that's how my financial services group started. So I was helping these people raise money. And then they said, Great, you did such a good job, can you do a home loan and so as I got more and more involved in the home loan business, this warehouse of CD covers, and bonders was just gathering dust. And luckily, it was a friend of mines warehouse. So I was paying him a nominal $200 a month rent, but we'd knocked off $80,000 with a stock, and etc, and etc. And it sat there. And I eventually started giving it out to people as gifts, because I had nothing else to do with it. And I have a

Andrew Stotz 12:35
lot of friends to give away $1,000

Rael Bricker 12:36
because the whole container load, right? 14 pallets or something, or whatever the number was that fits in a container. And about five years after that, it literally gathered dust in his friends warehouse. And and he moved warehouses. And another friend actually took over that same warehouse and I went to him, I went, hey, I've got this date stock sitting in the corner, can I leave it there and still pay you $200. So it was accumulating, you know, this $200 a month every month wasn't really costing me anything else. But five years later, a guy I knew in the community was down and out on his lack, just couldn't get a job was struggling. But he was a great product salesman, I recognized early on that I'm good at selling services, not products. And that's mortgages are our services, etc. Education was a service. And so this guy was great at product sales, and eventually turned around to him one day, and I said he has the keys to the warehouse. If you can sell that stuff, whatever you make is yours. And my accountant Roger full of stuff. And he actually managed to sell it to some $2 store for $5,000. But that $5,000 sustain his family for a couple months, until he got another position. So for me, it was a charitable act that cost me $80,000.05 $1,000 out of it. But you know, he cleared the stock and he cleared the warehouse and managed to sustain his family. And so for me, that was quite a, you know, a good outcome, although a terrible outcome from an investment point of view.

Andrew Stotz 14:13
Wow. So how would you describe the lessons that you learned from this?

Rael Bricker 14:17
Well, the one was, was self learning that I cannot sell product. Okay. I you know, I'm not the guy who's gonna sell you the latest widget. Okay, well, let us mousetrap. It's not me. I'm much more service oriented person. And I'm a consumer seller, not a business to business seller. Right. That's changed now in my speaking business. Much later on that I do sell to businesses because that's my main, my main market. But again, I'm selling a service. I'm selling me the package that you see here, either as an online presenter or prior to COVID face to face, warm body, sort of presenter. But the truth of it is, that was probably my biggest learning. I mean, I learned a lot about the retail sector. Yep, I learned how the retail sector actually works. You know, a great friend of mine here in Perth, who actually was one of the directors of the venture fund. He actually said to me once, and I should have actually taken that lesson that he told me, but I never internalized it. And that's a problem. Sometimes we don't realize the lessons to lead too late. He arrived in Australia, also from South Africa about 15 years before me. And he understood retail I didn't. And he understood that he needed to, he bought a little company that supplied methylated spirits, to the largest chain of hardware stores. So I'm trying to remember the name of the big chain in the US for a second home depot, Home Depot, Home Depot. And this company had a contract to supply methylated spirits to the equivalent of Home Depot on a national basis. That's all they did. And they bought big drums of methylated spirits, and put them into bottles and delivered them to Home Depot. But he said to and I said that was a weird business for you to buy. And he said No, it wasn't. Because I realized that once we had a contract with Home Depot, or whatever it was the Australian equivalent, I could get 20 other products from around the world and sell them through that same channel, because I was already an approved supplier. That's why I bought the business. And then there was an interesting lesson about retail for me, right? How large retail works, that they want to deal with as fewer suppliers as possible. I mean, as much as we as consumers would like to believe that they are out there doing the best for us and getting the widest range of product. No, they're not. Yeah, they are about, let's minimize our work, let's order from one supplier and get 50 products delivered into our into stores. So not even into our warehouse into our stores. Even better, and we don't care. So that was probably the biggest lesson.

Andrew Stotz 17:15
So let me summarize some of the things that I took away. The first thing is I just think about I always think about sales in Thailand is like there's a knife seller who walks the streets, selling knives. And it's just such a brutal job in the burning heat, knocking on doors, and you just realize like, sales can be tough, particularly a physical products, because there's an infrastructure there. It relies on touch, you know, there's just so much of the physicality of a physical product, that that, you know, has to be delivered. There's a supply chain, you know, there's this whole infrastructure. And I think that that's my second point is, it feels like, people probably underestimate the infrastructure needed to really be great at selling a product, where it's a digital product as an example, just, you know, there's just not that infrastructure.

Rael Bricker 18:14
Well, a service, you know, you know, now I, I sell online courses as you do. I sell but but even the mortgage business, you know, what is an actual mortgage, when you think about it, it's, it's not the house, it's not, it's not the piece of paper, that that that that gives the bank the right to, to, to foreclose on the property. You know, the mortgage is the conceptual barrier, the bridge between the vision of seeing themselves in that home and being in that home. That's what the mortgage is. So it's a service, it's a, you know, they could walk into the bank. But you know, in Australia in 2021, more than 60% of mortgages originate from brokers. So, the broking channel has become the dominant channel for that. And it is about the service proposition. It's about how we service our clients. It's got nothing to do with the physical stuff. And the more I do this, the more I realize, I'm not a physio, I can't be the salesman with goods in the briefcase, walking around and selling. And my late father used to do that, unfortunately. That was what he did. Yep, sold a variety of product physical product. And I probably was motivated not to do that for most of my life.

Andrew Stotz 19:34
If you ever saw for the listeners out there that saw the movie Glengarry Glen Ross, where he says, you know, you're going to lose this job, and then you're going to be at some bar somewhere going, smoking a cigarette, drinking a drink and saying, I used to be in sales. It's a tough racket. And, yeah, the other thing that I take away, it's something that I learned from some of my other guests. I'm thinking about one of them is Brandon Gailey, who was Episode 28. And he said, do your research before spending a dime. And the point is, is that when you have an idea to sell a product, before you start the business of selling that product, start selling that problem. And that, you know, a good example is say, say I want to sell these types of, you know, instruments, you know, whatever it is, let's say the CD cases, as an example, find, find how you can get 50 of them and get out and hit the streets and sell them before you commit to the 80,000. And what you'll find very quickly is the realities of sales, you know, all the hurdles that you face, you'll see in the first 50 that you sell, and if you end up at the end of their 50, with a lot of cash in the bank and thinking that went well, well then move into your business. But if you get to the end of the 50, and you're still with the 50, it could be assigned.

Rael Bricker 20:57
Well, that's exactly it. And in fact, in my book, you know, on the blurb, the back of my book called dive in now was it called dive in? There's a story behind that I won't go into it now. But it was about my triathlons. But the back of the book says business is not complicated business is simple. just dive in and adjust. Of course, while you're moving. The decision point from deciding that business is not complicated business is simple. And diving in is the analysis. Yeah, the problem I find with a lot of clients of mine now that I work with, they are just on this precipice. They're not prepared to dive in. They've done the spreadsheets, they've done the analysis, they've fallen in love with the product. And that was my problem, I fell in love with the product, I didn't fell in fall in love with the problem, or the pain point that it was solving. Yep. And I never understood that how to sell it on the pain point. I was trying to sell it for the beauty of the product, and not the problem it was solving. That was another lesson that great. So my philosophy now, which is less driven by product, it's more driven by services to dive in and adjust your costs while you're moving. Yes, but make the first step, make the first leap, go out and sell the first 50 and see if it works. Put it on your website, create a website, put it out there advertise it. So you spend a little bit of money on advertising, but it's your market research. You know, whatever you're doing, and that's what you have to do. But if we spend our life trying to be certain about the future, we'll never do anything, we'll be stuck in this inertia phase.

Andrew Stotz 22:39
So I'm wanting you to think about the young man or woman who's listening to this podcast who's been enthralled by a particular product. They're very excited, just as you were. And think about this question, based upon what you learn from this story and what you continue to learn what one action would you recommend our listeners take to avoid suffering the same fate?

Rael Bricker 23:00
I think you have to, you have to, at some point, jump off the cliff. But jump off the cliff with a parachute. So you know, if you're in Thrall by the product, go and do the market research. I've been in Australia just over two years at that time. So I didn't even know anybody you know, I didn't have a network built up. And all the people I knew were the companies that we'd invested in, in venture capital who were high tech startups. You know, it was they've started a tech boom. I didn't know anyone selling product to go and ask them an opinion or research. So So what is interesting, though, and I'll and I'll and I'll flip that a bit. A friend of mine at the same time, he arrived in Australia, three months before me, he had a product idea. And he went along to a guy that he'd met who'd been here for a long time. And he said, I really need to ask you for some research on my product that I want to bring in. And he picked up his briefcase and put it on the date table. And the guy said to him, I have to tell you, I'm not ethical. And if I like that product, I've got more money and more reach in you. And I'm just going to do it myself. And then there was an interesting statement that somebody could admit that they would do that. But not everyone's like that. A lot of people will altruistically. Do your research. So you have to ask the question. I mean, today everybody's, you know, legal sign this non disclosure agreement. Well, we know half the time, they're not worth the paper they're written on. But that's what the advice is to that, that that couple that person out there saying, I've got this amazing product, I want to sell it, I want to get out there and do it. They have to do two things. They have to do some level of research, independent of themselves, but they have to also understand and embrace the idea that they can sell. You know, I mentioned self limiting beliefs. A lot of people Meet say, I'm an order taker. Okay, and I'm not a hunter. Okay, well, in order to sell you need to be the hunter. When you've got Coca Cola is your product, you're an order taker. And even then they have representatives on the road, you know, competing with Pepsi, whatever it is, you're still selling coke and coke products. And where as you think that they just order takers is how many cases do you want the three, you have to be the hunter. And so in order to go out there, you have to accept that you can hunt, okay me to my 50s to realize that he could hand but in the service sector, not in the product sector.

Andrew Stotz 25:43
Nothing better than bagging a big deer and dragging it home to your family and carving it up and having food for three months. Hunters bring it home. Alright, last question. What's your number one goal for the next 12 months.

Rael Bricker 26:00
My number one goal for the next 12 months is to work with business leaders both established and emerging to create Business Excellence and rich and robust cultures in their businesses so that they can measure the growth and the profitability and the growth in the profitability.

Andrew Stotz 26:23
Exciting. Exciting.

Rael Bricker 26:25
That's that's the passion project. Yeah.

Andrew Stotz 26:28
All right, listeners, there you have it. Another story of loss to keep you winning. My number one goal for the next 12 months is to help you my listener, increase return and reduce risk in your life. To achieve this goal, I have created the free my worst investment ever community group with five free benefits I mentioned before, so just go to my worst investment ever.com right now to join. As we conclude, Rael, I want to thank you again for coming on the show. And on behalf of a Stotz Academy I hereby award you alumni status for turning your worst investment ever into your best teaching moment. Do you have any parting words for the audience?

Rael Bricker 27:08
No, just to dive in and enjoy the journey.

Andrew Stotz 27:12
Amen. dive in and enjoy the journey. Maybe go on to Amazon and search for dive in. And Rael Bricker and then you'll learn more about diving in and enjoy the journey and that's a wrap on another great story to help you create, grow and protect your wealth fellow risk takers. This is your worst podcast hose Andrew Stotz saying. I'll see you on the upside.